Play the Rewards Game
Procrastination is like a credit card: it's a lot of fun until you get the bill.
Channel Lucille Ball here and rack up those points with the following tips to maximizing rewards:
1. Reward types: Before you begin your search, determine the type of reward you are looking for: cash back, travel, gift cards, etc. Once you know what you are looking for, begin your search for the best card for each type of reward.
2. Strategy: After you review available cards and select one or more for the rewards you want, develop a strategy to use your cards to get the most out of their reward terms. You may find that some cards offer different rewards for different types of purchases.
3. Fees: You want to avoid paying any late fees, which average $34, because these fees quickly undermine any rewards you may earn. On the other hand, annual fees may be worth paying depending on the rewards being offered. For example, if you earn 6% back on purchases, then a $75 annual fee may make sense. You can always call the company and try to have the fee waived. If you signing up just for the sign-up bonus, then you will probably want to cancel the card before the fee is incurred.
4. Apply: Once you have narrowed down the cards with the best offers for you, apply for the credit cards within a two day period to minimize the number of inquiries recorded on your credit report. Multiple inquiries may damage your credit score.
5. Tracking: Develop a method to ensure you are using the right card for the right purchases.
6. Card balances: Keep your credit usage to 20% to 30% of your available credit because your credit score is also affected by the amount of credit you use.
7. Payments: Pay off your balance every month. If you allow yourself to carry a balance, the interest rates you incur will diminish or wipe out any rewards you earned.
With a small investment of time and some self control, you can make credit cards pay you, rather than paying them a ton of money in interest.